Business as usual covers up supply-line weakness

Some improvements in supply chain conditions not the result of better B2B processes

Ian Tostenson is president and CEO of the BC Restaurant and Foodservices Association | SUBMITTED

Supply shortages still exist in some industries, but many companies are slowly returning to business as usual, and able to fill customer orders from stock on hand. Since the global economy graduated from a gripping shipping and supply-chain crisis, containers have become far more accessible than they were last year, and shipping rates have retreated from the highs seen in late 2021 and in the first half of 2022.

“For most people, because they go into stores and they’re finding quite a lot of stock on the shelf. The supply chain thing is solved,” said Gary Newbury, a retail and supply chain specialist with RetailAID.

And for many it is. Ian Tostenson, president and CEO of the BC Restaurant and Foodservices Association, said that for local restaurants that make up his organization’s membership, food-supply issues have largely been resolved, and restaurants have been able to rely on food-supply leaders Sysco Corp. (NYSE:SYY) and Gordon Food Services to address the food-shortage concerns that developed during the pandemic.

Retailers largely report that the worst of the supply chain crunch is over, said Newbury. In fact, some are benefiting from higher prices due to inflation, which is making some businesses slightly more profitable than they would otherwise be.

Other companies, however, are concerned that improved supply conditions may be disguising more deeply rooted problems in domestic and global supply chains.

“I think that we didn’t address the supply-chain issues during the pandemic,” said Newbury. “We kind of fire-fought our way through these issues and when we do return to some form of im- proved volume throughput, we’ll start to bump into the same kind of issues.”

With recovery in progress, the focus turns to resilience.

COVID-19 didn’t cause global supply-chain problems, but rather exposed existing weaknesses, said Feyza Sahinyazan, an associate professor of operations management at Simon Fraser University’s Beedie School of Business.

It was no surprise that a one-in-100-year global pandemic would throw a monkey wrench into the cogs of the global economy. But even subsequent, more common events – like conflicts war and floods – have had disastrous impacts.

More problems will lead to higher transportation costs, difficulty finding transportation resources and longer wait times at ports, said Newbury, who added that favourable conditions won’t last if supply chains aren’t bolstered.

Digitization offers a solution, in that it can speed up loading and unloading processes that often get bogged down by manual paperwork, he said.

B.C. businesses can examine their shipment options and utilize supply chain management experts to manage potential supply risk, Sahinyazan said.

Diversified production processes with multiple suppliers can reduce overall business risk and improve efficiency, she added.

Newbury noted that now is the time to rethink the mantra of “just-in-time” business, and consider how some redundancy in business is needed to build up and maintain resilient supply lines.